Inflation
- Created by: alexmarkwell
- Created on: 20-10-14 10:17
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- Inflation
- What causes inflation?
- Cost-push inflation
- Caused by rising costs
- Money supply inflation
- Caused by rapid growth in the money supply
- Cost-push inflation
- 2 Ways it is measured
- Consumer price index (CPI)
- A measure of the general price level (excluding housing costs); used in the UK and Eurozone.
- Used by the UK
- Every month 600 goods are being measured for 7,000 families
- Retail Price index (RPI)
- A measure of the general price level which includes house prices and council tax
- This creates and average price which is turned into an index number
- Retail Price index (RPI)
- Retail Price index (RPI)
- A measure of the general price level which includes house prices and council tax
- Consumer price index (CPI)
- Demand-pull inflation
- Inflation caused by too much demand in the economy relative to supply.
- How is it caused?
- Rising consumer spending fuelled by tax cuts or low interest rates.
- Sharp increases in government spending.
- Rising demand for resources by firms
- Booming demand for exports
- How does inflation affect economy
- Reduces purchasing power
- Reduces the value of savings
- How does inflation affect buissness?
- Increased buisness costs
- Balance of payments problems
- Increases in government spending.
- How does inflation affect buissness?
- Increased buisness costs
- Balance of payments problems
- Increases in government spending.
- What causes inflation?
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